semi-annualreport june 30, 2018 - franklin templeton

Semi-Annual Report June 30, 2018

FRANKLIN TARGET RETURN FUND

The enclosed semi-annual financial statements have not been reviewed by the external auditors of the Fund.

Dear Investor,

I am pleased to share with you the semi-annual financial statements of Franklin Target Return Fund, for the six months ended June 30, 2018.These statements are supplemented by a semi-annual Management Report of Fund Performance (MRFP) for the Fund.

This year started with a bumpy, volatile first quarter in the markets, but volatility receded in the second quarter as geopolitical uncertaintyincreased. The global economy has reached an advanced stage of its cycle and it appears to be sustaining strength even as interest rates risein some countries, including Canada. Investors and other market watchers are focused on the trajectory of interest rates as well asdevelopments in global trade disputes and geopolitical tensions.

In this shifting market environment, the team at Franklin Templeton Investments Canada is working even harder to provide exceptional assetmanagement services to investors and financial advisors. We are working to deliver Franklin Templeton’s deep expertise across a wide rangeof investment solutions, from mutual funds and ETFs, to Private Wealth Pools, multi-asset portfolios and alternative investments. I am proudof my colleagues as they work to build and strengthen relationships with advisors and investors across Canada.

I encourage you to review your semi-annual Management Reports of Fund Performance to assess how your investments performed in the firsthalf of 2018. An MRFP can give you insights into the positioning of the portfolio and the outlook of the respective investment managers.

In all market environments – and in all parts of the economic cycle – one of the best moves you can make is to work with a qualified financialadvisor. An advisor can give you information, context and analysis about markets and investing to help create a plan to achieve your goals andkeep on course. For those of you who already work with advisors, they can help you process what’s going on in the capital markets and whatrisks and opportunities exist.

Advice really does hold its value throughout the market and news cycles.

Please visit us at franklintempleton.ca for news and insights about our company. You can also follow us on Twitter – @FTI_Canada – for helpfulinformation and insights about investing, financial planning and markets.

In closing, thank you for choosing Franklin Templeton Investments as your partner for asset management services. We are always striving tobe a better partner in our work to help clients like you achieve your goals, today and for years to come.

I wish you all the best for the remainder of 2018 and beyond.

Sincerely,

Duane W. GreenPresident and Chief Executive OfficerFranklin Templeton Investments Canada

Franklin Target Return Fund

Franklin Target Return Fund 1

http://franklintempleton.ca

Financial StatementsFranklin Target Return Fund ......................................................................................................................... 3

Notes to Financial Statements.............................................................................................................................. 16

Table of Contents

Franklin Templeton Investments Funds2

SharesAverage

Cost Fair Value

(000s) (000s)INVESTMENTS: 72.14%COMMON STOCKS: 35.06%United States: 18.37%

AbbVie Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 $ 13 $ 11Accenture PLC, A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 60 68Acuity Brands Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 6 7Ally Financial Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 14 15Annaly Capital Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,242 17 17Apple Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 54 58AT&T Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 34 34Athene Holding Ltd., A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 7 7AutoZone Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 5Best Buy Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 7 9Biogen Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 20 21Brighthouse Financial Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 7 5Broadridge Financial Solutions Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 18 18Cadence Design Systems Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 10 11Campbell Soup Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 10 10Capital One Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 37 38CBRE Group Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 13 15CBS Corp., B .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 7 7CDK Global LLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 9 9Cimarex Energy Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 12 13Cognizant Technology Solutions Corp., A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 27 28Comcast Corp., A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 11 11CVS Health Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 10 10Delta Air Lines Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 14 13Estee Lauder Companies Inc., A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 38 43Everest Re Group Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 13 13Exelon Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 13 13Express Scripts Holding Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 26 33F5 Networks Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 12 15Fastenal Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 12 12Freeport-McMoRan Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 13 14General Motors Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 20 19Gilead Sciences Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 43 42H&R Block Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 8 7HCA Holdings Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 16 17HollyFrontier Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 10 11IDEXX Laboratories Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8 9Intel Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 17 22International Business Machines Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 19 19International Paper Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 9 9Intuit Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 49 65Jones Lang LaSalle Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 8 8KLA-Tencor Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 16 15Lear Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 18 18Lincoln National Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 21 20LyondellBasell Industries NV, A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 49 52Macy’s Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 4 8


SCHEDULE OF INVESTMENTS As at June 30, 2018 (Unaudited)

The accompanying notes are an integral part of these financial statements.


SharesAverage

Cost Fair Value

(000s) (000s)United States: 18.37% (Continued)

Mastercard Inc., A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 $ 27 $ 28MetLife Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 7 6Michael Kors Holdings Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 12 15Micron Technology Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642 36 44Mylan NV .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 15 15Newfield Exploration Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 7 9Pfizer Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 6 6Philip Morris International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 20 17Prudential Financial Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 28 26Robert Half International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 10 11Ross Stores Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 17 21S&P Global Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 22 24Simon Property Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 48 53Skyworks Solutions Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 15 16Target Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 6 7Texas Instruments Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 38 43The Boeing Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 9 12The Gap Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 10 11The Goodyear Tire & Rubber Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 9 8The Home Depot Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 24 26The Kroger Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 9 12The TJX Companies Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346 32 43Tyson Foods Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 14 14United Continental Holdings Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 7 7United Parcel Service Inc., B.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 31 30United Rentals Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 11 10United Therapeutics Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 8 8Valero Energy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 12 17Verizon Communications Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 26 27Viacom Inc., B .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 13 13W.W. Grainger Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 11 13Walgreens Boots Alliance Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 6 6Walmart Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 29 29Western Digital Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 24 23Western Union Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 12 13

1,475 1,587

Japan: 3.63%Astellas Pharma Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902 17 18Daiwa House Industry Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 27 25Hoya Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 21 23Japan Airlines Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 11 10Japan Post Holdings Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 8 8KDDI Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 18 18Mitsubishi UFJ Financial Group Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,192 10 9Mizuho Financial Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,245 19 18Nexon Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372 7 7NTT DoCoMo Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 21 22ORIX Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004 23 21


SCHEDULE OF INVESTMENTS As at June 30, 2018 (Unaudited) (Continued)


Franklin Target Return Fund4

SharesAverage

Cost Fair Value

(000s) (000s)Japan: 3.63% (Continued)

Resona Holdings Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,829 $ 13 $ 13Ryohin Keikaku Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 45 47Start Today Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 10 12Subaru Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 11 10Sumitomo Mitsui Financial Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355 19 18Toshiba Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,758 24 27Tosoh Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 11 8

315 314

United Kingdom: 2.11%Anglo American PLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 13 12Barclays PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,833 9 9Barratt Developments PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,027 11 9BT Group PLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,196 29 24Burberry Group PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 12 16Centrica PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,998 15 16Fiat Chrysler Automobiles NV .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 20 18GlaxoSmithKline PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 6 6International Consolidated Airlines Group SA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628 6 7Mondi PLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 8 10Next PLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 11 15Persimmon PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 14 13Royal Mail PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935 9 8Taylor Wimpey PLC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,185 11 10The Berkeley Group Holdings PLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 8 9

182 182

Canada: 0.92%Magna International Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 24 27Manulife Financial Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 14 13Power Corp. of Canada .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 11 10Seven Generations Energy Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 3 3Teck Resources Ltd., B .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 18 20West Fraser Timber Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6 6

76 79

Switzerland: 0.88%Partners Group Holding AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 14 16Roche Holding AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 56 52Swiss Re AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 9 8

79 76

France: 0.81%Cie Generale des Etablissements Michelin SCA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 27 24Peugeot SA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 19 19Societe Generale SA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 18 16UbiSoft Entertainment SA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 9 11

73 70

China: 0.75%Agricultural Bank of China Ltd., H .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,891 6 6Autohome Inc., American Depositary Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 7 7





SharesAverage

Cost Fair Value

(000s) (000s)China: 0.75% (Continued)

Bank of China Ltd., H.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,340 $ 11 $ 11Bank of Communications Co. Ltd., H.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,311 8 9China CITIC Bank Corp. Ltd., H.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,420 7 7China Huarong Asset Management Co. Ltd., H.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 6 4China Minsheng Banking Corp. Ltd., H .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600 7 6Momo Inc., American Depositary Receipt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 5 6NetEase Inc., American Depositary Receipt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 11 9

68 65

Germany: 0.74%BASF SE .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 24 23Covestro AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 20 18Daimler AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 11 8Deutsche Lufthansa AG .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 10 8Hugo Boss AG.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 6 7

71 64

Denmark: 0.74%Coloplast AS, B.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 12 15Novo Nordisk AS, B.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 35 33Pandora AS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 14 11Vestas Wind Systems AS .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 6 5

67 64

Hong Kong: 0.73%CK Asset Holdings Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,772 30 29Galaxy Entertainment Group Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 983 11 10Sands China Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,514 12 11Sino Biopharmaceutical Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,478 9 13

62 63

Netherlands: 0.70%Aegon NV.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,945 15 15EXOR NV .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 11 10Koninklijke Ahold Delhaize NV .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,112 28 35

54 60

South Korea: 0.68%BGF Retail Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2 2Coway Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 5 6Industrial Bank of Korea .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 5 4LG Household & Health Care Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 11 11Lotte Chemical Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6 6SK Hynix Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 28 30

57 59

Norway: 0.64%Equinor ASA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,218 33 42Marine Harvest ASA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 7 7Telenor ASA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 5 6

45 55





SharesAverage

Cost Fair Value

(000s) (000s)Australia: 0.45%

Aristocrat Leisure Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 $ 12 $ 16Cochlear Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 10 11Woolworths Group Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 11 12

33 39

Sweden: 0.43%Boliden AB .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 11 11Hennes & Mauritz AB, B .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 13 7Lundin Petroleum AB... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 6 8Swedish Match AB.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 8 11

38 37

India: 0.38%Hindustan Unilever Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 19 22ITC Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,151 11 11

30 33

Taiwan: 0.36%Innolux Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,553 5 4President Chain Store Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 8 9Taiwan Semiconductor Manufacturing Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,273 12 12Yuanta Financial Holding Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,729 6 6

31 31

Singapore: 0.36%DBS Group Holdings Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 11 10Oversea-Chinese Banking Corp. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 980 12 11United Overseas Bank Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389 10 10

33 31

Israel: 0.32%Bank Hapoalim BM ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,117 10 10Bank Leumi Le-Israel BM ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,576 11 12Check Point Software Technologies Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 6 6

27 28

Italy: 0.24%Enel SpA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,070 16 15Poste Italiane SpA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 7 6

23 21

Brazil: 0.17%Ambev SA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,716 13 10Banco Santander Brasil SA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 6 5

19 15

Austria: 0.13%OMV AG ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 12 11

South Africa: 0.12%Mr. Price Group Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 7 5Tiger Brands Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 7 5

14 10





SharesAverage

Cost Fair Value

(000s) (000s)Mexico: 0.10%

Wal-Mart de Mexico SAB de CV, V .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,600 $ 8 $ 9

New Zealand: 0.08%Fisher & Paykel Healthcare Corp. Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 7 7

Colombia: 0.08%Ecopetrol SA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,342 7 7

Finland: 0.07%Neste Oil OYJ.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 5 6

Indonesia: 0.07%Unilever Indonesia Tbk PT .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,408 7 6

Total Common Stocks: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,918 3,029

PREFERRED STOCKS: 0.53%South Korea: 0.46%

Samsung Electronics Co. Ltd., Preferred .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891 45 40

Germany: 0.07%Bayerische Motoren Werke AG (BMW), Preferred .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 7 6

Total Preferred Stocks: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 46

EXCHANGE-TRADED FUNDS: 10.39%United States: 10.39%

iShares MSCI ACWI ETF .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,750 258 257S&P Depositary Receipt Bloomberg Barclays High Yield Bond ETF.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,375 254 251S&P Depositary Receipt Gold Trust ETF .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 392 390

904 898

Total Exchange-Traded Funds: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 904 898

Principal Amountin Currency

of Issue

BONDS: 2.23%China: 2.23%

Government of ChinaSenior Note, 2.36%, 8/18/2021.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 CNY 98 95Senior Note, 3.36%, 5/21/2022.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 CNY 100 98

Total Bonds: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 193

Units

UNDERLYING FUNDS: 23.93%Franklin Bissett Canadian Government Bond Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,945 760 754Franklin Bissett Corporate Bond Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,528 512 496Franklin Bissett Money Market Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,437 274 274Templeton Emerging Markets Smaller Companies Fund† .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,242 198 198Templeton Global Bond Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,106 364 346

Total Underlying Funds: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,108 2,068

Total Investments: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,180 6,234





Principal Amountin Currency

of IssueAverage

Cost Fair Value

(000s) (000s)SHORT-TERM SECURITIES: 26.26%

Argentina Treasury Bill, 3.121%, 10/12/2018.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 ARS $ 83 $ 69CIBC, Term Deposit, 1.10%, 7/3/2018 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100,000 CAD 1,100 1,100Royal Bank of Canada, Term Deposit, 1.15%, 7/3/2018 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100,000 CAD 1,100 1,100

Total Short-Term Securities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,283 2,269

TOTAL INVESTMENTS: 98.40% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,463 8,503

NET UNREALIZED LOSS ON DERIVATIVES, excluding Options: (0.94%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81)PURCHASED OPTIONS: 0.30% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26WRITTEN OPTIONS: 0.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —OTHER ASSETS, less liabilities: 2.24% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

TOTAL NET ASSETS: 100.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,641

† A sub-fund of Franklin Templeton Investments funds, which are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Sociétéd’Investissement à Capital Variable (SICAV), an open-end investment company.





SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2018)FORWARD FOREIGN EXCHANGE CONTRACTS

CounterpartyCreditRating Settlement Date

Currencyto be Delivered

Par Valuein Canadian Dollars

Currencyto be Received

Par Valuein Canadian Dollars

ContractPrice

UnrealizedGain (Loss)

(000s) (000s) (000s) (000s) (000s)JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 57 AUD $ 56 56 CAD $ 56 $ 0.9744 $ —

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 69 GBP 120 124 CAD 124 1.7926 4

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 207 SEK 30 31 CAD 31 0.1515 1

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 109,300 KRW 128 130 CAD 130 0.0012 2

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . . . 4 $ 7

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 1,573 USD 2,067 2,018 CAD 2,018 1.2825 (49)

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ July 20, 2018 26,945 JPY 320 319 CAD 319 0.0119 (1)

JP Morgan Chase Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . A+ August 31, 2018 163 CAD 163 13,527 JPY 161 83.1975 (2)

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . . . 3 $(52)

Net Unrealized Loss on ForwardExchange Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(45)

TOTAL RETURN SWAPS

Description CounterpartyCreditRating

ExpirationDate

PaymentRate

NotionalAmount

UnrealizedAppreciation/(Depreciation)

(000s) (000s)

Traded Index

BOFAML Vortex Alpha Index . . . . . . . . . . . . . . . . . . . . . . Bank of America, N.A. A+ 11/09/2018 0.15% $213 $ 6

BOFAML Vortex Alpha Index . . . . . . . . . . . . . . . . . . . . . . Bank of America, N.A. A+ 11/09/2018 0.15% 106 2

J.P. Morgan exAL-Capped Enhanced Alpha Select4X Leverage Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

JP Morgan Chase Bank, N.A. A+ 03/28/2019 1.16% 263 —

J.P. Morgan US Volatility QES Momentum Index . . . JP Morgan Chase Bank, N.A. A+ 11/08/2018 0.09% 170 1

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . 4 $ 9

J.P. Morgan Custom Basket. . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. A+ 02/07/2019 0.50% 400 (1)

J.P. Morgan Equity Risk Premium - GlobalBalanced Multi-Factor (Long/Short) USD Index . . . .

JP Morgan Chase Bank, N.A. A+ 09/06/2018 — 1,277 (39)

SGI VI Smart Beta Index . . . . . . . . . . . . . . . . . . . . . . . . . . Societe Generale A 02/27/2019 FEDL01 +0.005%

86 (1)

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . 3 $(41)

Unrealized Loss on Total Return Swaps $(32)

FUTURES CONTRACTS

Description CounterpartyDelivery

Date

Number ofcontractsbought(sold) Currency

NotionalAmount

UnrealizedAppreciation/(Depreciation)

(000s) (000s)

MSCI Emerging Markets Index . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. 9/21/2018 (9) USD $(629) $ 4U.S. Dollar Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. 9/17/2018 3 USD $ 372 $ 2

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . . . 2 $ 6

MSCI World Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. 9/21/2018 7 USD $ 553 $(10)

Total Number of Contracts . . . . . . . . . . . . . . . . . . . . . . . . 1 $(10)

Net Unrealized Loss on Futures $ (4)

Net Unrealized Loss on Derivatives . . . . . . . . . . . . . . . . . . . $ (81)





OPTIONS CONTRACTS

CounterpartyStrikePrice

ExpirationDate Currency Notional Amount Fair Value

(000s) (000s)

PURCHASED OPTIONS

Equity Index Put Option

S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Merrill Lynch, Pierce, Fenner & Smith, Inc. $ 2,050.00 12/18/2020 USD 2 $22

Equity Index Call Option

DJ Euro STOXX 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. 3,775.00 09/21/2018 EUR 6 —

S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. 2,975.00 09/21/2018 USD 1 —

Debt Option Calls

U.S.Treasury 10 Yr. Note . . . . . . . . . . . . . . . . . . . . . . . . . Citibank N.A. 119.50 08/24/2018 USD 3 4

Total Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 $26

Total Premiums Paid $28,261

CounterpartyStrikePrice

ExpirationDate Currency

Number ofContracts Fair Value

(000s)

WRITTEN OPTIONS

Equity Index Call Option

FTSE MIB Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP Morgan Chase Bank, N.A. $23,500.00 09/21/2018 EUR (1) $—

Total Written. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 $—

Total Premiums Received $1,210

2018 2017

Credit Ratings*% of

Net Assets% of

Net AssetsA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23 —BB... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.80 —

* Credit ratings of issuers of interest bearing instruments, excluding cash andovernight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s, Fitchand DBRS ratings.





STATEMENTS OF FINANCIAL POSITIONAs at June 30, 2018 (Unaudited) and December 31, 2017

2018 2017

(000s) (000s)AssetsCurrent assetsNon-derivative investments at fair value through profit or loss $ 8,503 $ 6,240Cash

Canadian 135 2Receivables

Due from brokers (Note 3(e)) 2 7Margin and collateral (Note 3(e)) 63 1Subscription of redeemable units — 180Dividends, interest and withholding tax 13 7

Purchased options 26 8Unrealized gain on derivatives 22 57

8,764 6,502

LiabilitiesCurrent liabilitiesPayables

Due to brokers (Note 3(e)) 15 1Management fees 4 4Fixed administration fees 1 1

Distributions to unitholders — 54Written options — 2Unrealized loss on derivatives 103 18

123 80

Net assets attributable to holders of redeemable units $ 8,641 $ 6,422

Net assets attributable to holders of redeemable units per series (000s)Series A $ 1,067 $ 1,042Series F 274 159Series O 4,235 2,146Series PF 3,065 3,075

Number of redeemable units outstanding (Note 4)Series A 110,348 104,239Series F 27,933 15,824Series O 427,515 212,010Series PF 311,966 304,875

Net assets attributable to holders of redeemable units per unit — CADSeries A $ 9.67 $ 10.00Series F 9.80 10.07Series O 9.91 10.12Series PF 9.83 10.09

• Fund launched April 11, 2017

Signed on behalf of Franklin Templeton Investments Corp. as Manager-Trustee(Signed) Duane Green (Signed) Ghion Shewangzaw

Director Director




STATEMENTS OF COMPREHENSIVE INCOMEFor the six months ended June 30, 2018 and 2017 (Unaudited)

2018 2017

(000s) (000s)Income

Distributions received from underlying funds (Note 3(h)) $ 21 $ 3Dividends 58 5Interest for distribution purposes (Note 3(h)) 16 1Net realized and/or unrealized foreign exchange gain (loss) (6) (5)Net realized gain (loss) on investments and derivatives (Note 3(h)) (145) 1Net change in unrealized appreciation (depreciation) in value of investments and derivatives (108) (47)

Total income (loss), net (164) (42)

ExpensesManagement fees (Note 5(a)) 25 4Fixed administration fees (Note 5(b)) 4 1Independent review committee fees 1 —

Operating expenses before amounts waived/paid by Manager 30 5

Net operating expenses after amounts waived/paid by Manager 30 5Transaction costs (Note 8) 3 2

Total expenses, net 33 7

Net income (loss) before income taxes (197) (49)Withholding tax expense 12 —

Total expenses, net 45 7

Increase (decrease) in net assets attributable to holders of redeemable units from operations $ (209) $ (49)

Increase (decrease) in net assets attributable to holders of redeemable units from operations per series (000s)Series A $ (35) $ (10)Series F (6) (1)Series O (87) —*

Series PF (81) (38)Weighted average number of units outstanding

Series A 106,782 52,868Series F 22,652 2,482Series O 371,704 875Series PF 310,230 257,596

Increase (decrease) in net assets attributable to holders of redeemable units from operations per unitSeries A $ (0.33) $ (0.19)Series F (0.27) (0.43)Series O (0.23) (0.39)Series PF (0.26) (0.15)

* Amount rounded to zero in the nearest thousand.





STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITSFor the six months ended June 30, 2018 and 2017 (Unaudited) (000s)

All Series Series A Series F

2018 2017 2018 2017 2018 2017

Net assets attributable to holders of redeemable units at beginning of period $6,422 $ — $1,042 $ — $159 $—

Increase (decrease) in net assets attributable to holders of redeemable units from operations (209) (49) (35) (10) (6) (1)

Distributions to holders of redeemable unitsFrom net investment income — — — — — —From net realized gains on investments — — — — — —From return of capital — — — — — —

Total distributions to holders of redeemable units — — — — — —

Redeemable units transactionsSubscriptions 2,600 3,586 137 638 133 58Reinvestments — — — — — —Redemptions (172) — (77) — (12) —

Net increase (decrease) from redeemable units transactions 2,428 3,586 60 638 121 58

Increase (decrease) in net assets attributable to holders ofredeemable units 2,219 3,537 25 628 115 57

Net assets attributable to holders of redeemable units at end of period $8,641 $3,537 $1,067 $ 628 $274 $57

Series O Series PF

2018 2017 2018 2017

Net assets attributable to holders of redeemable units at beginning of period $2,146 $ — $3,075 $ —

Increase (decrease) in net assets attributable to holders of redeemable units from operations (87) —* (81) (38)

Distributions to holders of redeemable unitsFrom net investment income — — — —From net realized gains on investments — — — —From return of capital — — — —

Total distributions to holders of redeemable units — — — —

Redeemable units transactionsSubscriptions 2,199 18 131 2,872Reinvestments — — — —Redemptions (23) — (60) —

Net increase (decrease) from redeemable units transactions 2,176 18 71 2,872

Increase (decrease) in net assets attributable to holders ofredeemable units 2,089 18 (10) 2,834

Net assets attributable to holders of redeemable units at end of period $4,235 $ 18 $3,065 $2,834

* Amount rounded to zero in the nearest thousand.





STATEMENTS OF CASH FLOWSFor the six months ended June 30, 2018 and 2017 (Unaudited)

2018 2017(000s) (000s)

Cash flows from operating activitiesInterest received $ 11 $ 1Dividends received, net of withholding taxes 47 2Proceeds from sale and maturity of investments 3,994 —Purchases of investments (6,186) (3,461)Receipts on settlement of derivative activities 2,003 6Payments on settlement of derivative activities (2,262) (11)Realized foreign exchange gain/(loss) 4 3Operating expenses paid (30) (2)

Net cash from/(used in) operating activities (2,419) (3,462)

Cash flows from financing activitiesProceeds from issuances of redeemable units 2,779 3,476Amounts paid on redemption of redeemable units (171) —Distributions paid to holders of redeemable units, net of reinvested distributions (54) —

Net cash from/(used in) financing activities 2,554 3,476

Net increase (decrease) in cash 135 14Cash at beginning of period 2 —Effect of exchange rate changes (2) (2)

Cash at end of period $ 135 $ 12




1. Organization

(a) Inception and Financial Reporting Dates

Franklin Target Return Fund (the “Fund”) is a commodity pool as defined under National Instrument 81-104 and a trust governed by thelaws of Ontario pursuant to a Master Declaration of Trust. Franklin Templeton Investments Corp. (�FTIC�), a corporation duly incorporatedunder the laws of the Province of Ontario (hereinafter called the �Manager� and �Trustee�), having an office at 200 King Street West, Suite1500, Toronto, Ontario, M5H 3T4 and an indirectly wholly owned subsidiary of Franklin Resources Inc. (�FRI�), a United States Securitiesand Exchange Commission (�SEC�) registered company listed on the New York Stock Exchange, is the manager, portfolio advisor, transferagent and trustee of the Fund. The Fund commenced operations on April 11, 2017.

The Fund may offer one or more series of units designated as Series A, F, PF and O. Each Series differs by its initial sales load, contingentdeferred sales charges, management fees and initial minimum investment amount.

The Fund is designed to achieve a total return that exceeds the return of the Government of Canada 91-day treasury bill over a rollingthree-year period, regardless of the prevailing market conditions, by actively managing direct and indirect exposure to equity securities,fixed income securities, cash and cash equivalents and derivative instruments to access alternative investment strategies with lowcorrelation to traditional equity and fixed income instruments.

The financial statements of the Fund include the Schedule of Investments as at June 30, 2018, and the Statements of Financial Positionas at June 30, 2018 and December 31, 2017. The Statements of Comprehensive Income, Changes in Net Assets Attributable to Holdersof Redeemable Units and Cash Flows for the Fund are for the periods ended June 30, 2018 and 2017, except where the Fund wasestablished during either period, in which case the period is from commencement of operations (inception date) to June 30.

These financial statements have been authorized for issue by the Board of Directors of the Manager on August 15, 2018.

2. Basis of Presentation of IFRS

These financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”), as issued bythe International Accounting Standards Board.

The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets andfinancial liabilities (including derivatives) at fair value through profit or loss.

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have beenconsistently applied to all periods presented.

3. Summary of Significant Accounting Policies

The significant accounting policies are as follows:

(a) Classification of financial assets and liabilities — Effective January 1, 2018, the Fund adopted IFRS 9 Financial Instruments. TheFund’s financial assets and financial liabilities, under IFRS 9 are classified and measured at fair value through profit and loss(�FVTPL�), as those financial assets and financial liabilities are managed together and their performance evaluated on a fair valuebasis in accordance with the Fund’s documented investment strategy. This is consistent with the classification category prior to thetransition to IFRS 9, with the exception of derivatives which are categorized as fair value through profit and loss. Derivatives werepreviously classified as held for trading under IAS 39. All financial assets and financial liabilities are shown on the Fund’s Statementsof Financial Position and are measured as FVTPL with the associated unrealized gain/loss included in the Statements ofComprehensive Income in net change in unrealized appreciation (depreciation) in value of investments and derivatives.

There were no changes in the measurement attributes for any of the financial assets and liabilities upon transition to IFRS 9.

The Fund’s obligation for net assets attributable to holders of redeemable units is presented at the redemption amount. All otherfinancial assets and liabilities are carried at amortized cost which approximates fair value due to their short-term nature.


NOTES TO FINANCIAL STATEMENTS For the periods ended June 30, 2018 (Unaudited) and December 31, 2017


3. Summary of Significant Accounting Policies (Continued)

The net asset value (�NAV�) is the value of the total assets of the Fund less the value of its total liabilities determined, on eachvaluation day, in accordance with Part 14 of National Instrument (NI) 81-106 Investment Fund Continuous Disclosure for thepurpose of processing unitholder transactions (herein called the �Trading NAV�). Net assets are determined in accordance with IFRS(herein called the �IFRS NAV�) and may differ to the Fund’s Trading NAV. Where a Fund’s Trading NAV is not equal to its IFRS NAV,a reconciliation is shown in Note 11.

(b) Classification of redeemable units — The Fund’s outstanding redeemable units’ entitlements include a contractual obligation todistribute any net income and net realized capital gains annually in cash and therefore the ongoing redemption feature is not theunits’ only contractual obligation. Consequently, the Fund’s outstanding redeemable units are classified as financial liabilities inaccordance with the requirements of International Accounting Standard 32 �Financial Instruments: Presentation�.

(c) Valuation of series — A separate net assets per unit is calculated for each series of units in the Fund. The net assets of a series iscomputed by calculating the series’ proportionate share of the assets and liabilities of the Fund common to all series, adjusted forthe assets and liabilities of the Fund attributable only to that series. Expenses directly attributable to a series are charged to thatseries. Other expenses, investment income, realized and unrealized capital and foreign exchange gains and losses are allocatedproportionately to each series based upon the relative net assets of each series, except for items that can be specifically attributedto one or more series.

(d) Valuation of investments — Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants on the measurement date. The fair value of equity securities and derivative financialinstruments (�derivatives�) traded in active markets is measured at quoted market prices at the close of trading on the reporting date.The Fund uses the last traded market price for both financial assets and financial liabilities where the last traded price falls withinthe bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will review and applya price within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. Over thecounter (�OTC�) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiplemarkets or on multiple exchanges are valued according to the broadest and most representative market (that is, the principalmarket). Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund uses multiple valuation techniquesto determine fair value. In instances where sufficient market activity exists, a market-based approach utilizing quotes from marketmakers is used to determine fair value. In instances where sufficient market activity may not exist or is limited, proprietary valuationmodels are used, which may consider market characteristics such as benchmark yield curves, credit spreads, estimated defaultrates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collaterals andother unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

The Manager has procedures to determine the fair value of securities and other financial instruments for which market prices arenot readily available or which may not be reliably priced. Under these fair valuation procedures, the Fund primarily employs amarket-based approach, which may use related or comparable assets or liabilities, recent transactions, market multiples, bookvalues, and other relevant information for the investment to determine its fair value. The Fund may also use an income-basedvaluation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts mayalso be applied due to the nature or duration of any restrictions on the disposition of the investments, but only if they arise as a featureof the instrument itself. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly fromthe values that would have been used had an active market existed.

Investments in Underlying Funds are made in Series O units of the Underlying Fund and valued at the Underlying Fund’s net assetvalue on valuation day.

All security valuation techniques are periodically reviewed by the Valuation Committee of the Manager and are approved by theManager. The Valuation Committee provides administration and oversight of the Fund’s valuation policies and procedures. Theseprocedures allow the Valuation Committee to utilize independent pricing services, quotations from securities and financialinstrument dealers, and other market sources to determine fair value.

(e) Derivative financial instruments — The Fund may invest in derivatives in order to manage risk or gain exposure to various otherinvestments or markets. Derivative financial instruments may also be used for trading purposes where the Portfolio Managerbelieves this would be more effective than investing directly in the underlying financial instruments. Derivatives are financialcontracts based on an underlying or notional amount, require no initial investment or an initial investment that is smaller than would


NOTES TO FINANCIAL STATEMENTS For the periods ended June 30, 2018 (Unaudited) and December 31, 2017 (Continued)



normally be required to have similar response to changes in market factors, and require or permit net settlement. Derivatives containvarious risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, thepotential for an illiquid secondary market, and/or the potential for market movements, which expose the Fund to gains and lossesin excess of the amounts shown on the Statements of Financial Position. Realized gain and loss and unrealized appreciation anddepreciation on these contracts for the period are included in the Statements of Comprehensive Income.

(i) Foreign/Forward exchange contracts — When a Fund purchases or sells foreign securities, it may enter into foreign exchangecontracts to minimize foreign exchange risk from the trade date to the settlement date of the transactions. A foreign exchangecontract is an agreement between two parties to exchange different currencies at an agreed upon exchange rate at a futuredate.

A Fund may also enter into forward exchange contracts to hedge against fluctuations in foreign exchange rates. Thesecontracts are valued as the difference between the contractual forward foreign exchange rates and the mid forward rate forcurrency held or sold short at the reporting date. The unrealized gains or losses on the contracts are included in the Statementsof Financial Position. Realized gains and losses and changes in unrealized gains and losses are included in the Statements ofComprehensive Income.

(ii) Futures contracts — The Fund may enter into futures contracts to manage and/or gain exposure to commodity price, interestrate and equity price risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset ata specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value isaccounted for as a variation margin payable/receivable in the Statements of Financial Position.

(iii) Options — Options give the purchaser the right but not the obligation, to buy (call) or sell (put) an underlying security orfinancial instrument at an agreed exercise or strike price during a specified period or on a specified date.

Options purchased are recorded as investments; options written (sold) are recorded as liabilities on the Statements of FinancialPosition. These investments are reported at fair value on the Fund’s Statements of Financial Position and any gains or lossesresulting from revaluation are included in net change in unrealized appreciation (depreciation) in value of investments andderivatives on the Statements of Comprehensive Income.

When an option is exercised and the underlying securities are acquired or delivered, the acquisition cost or sale proceeds areadjusted by the amount of the premium. When an option is closed, the Fund will realize a gain or loss equal to the differencebetween the premium and the cost to close the position. When an option expires, gains or losses are realized equivalent to theamount of premiums received or paid, respectively. The net realized gains (losses) on written and purchased options areincluded on the Statements of Comprehensive Income in net realized gain (loss) on investments and derivatives.

Open options at period end are presented in the Schedule of Investments under the captions �Purchased options�, �Writtenoptions� as applicable.

(iv) Swaps — The Fund may invest in swaps, primarily to manage their exposure to credit risk, interest rate risk or a reference asset.A swap is an agreement between two parties to exchange future cash flows at periodic intervals based on a notional principalamount. Such periodic payments paid or received are accrued daily and included in the due to/from broker account in theStatements of Financial Position. The Fund may invest in the following swap contracts:

(i) A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receivescredit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. The underlyingreferenced debt obligation may be a single issuer of corporate or sovereign debt, a credit index, or a tranche of a credit index.The seller receives a periodic payment that is a percentage applied to a notional principal amount and in the event of defaultof the underlying referenced debt obligation, the buyer is entitled to receive the notional amount of the credit default swapcontract from the seller in exchange for the referenced debt obligation, or other agreed amount.

(ii) An interest rate swap is used primarily to manage and/or gain exposure to fluctuations in interest rates. It is an agreementbetween the Fundand a counterparty which involves the exchange of a fixed payment for a floating payment that is linked toan interest rate and an agreed upon notional amount. These agreements may be privately negotiated in the OTC market (�OTCinterest rate swaps�) or may be executed on a registered exchange (�centrally cleared interest rate swaps�).





(iii) A total return swap is used primarily to gain exposure and benefit from a reference asset. It is an agreement between theFund and a counterparty which involves the exchange of a fixed payment for a floating payment based on the return of anunderlying asset, which includes both the income it generates and any capital gains. These agreements may be privatelynegotiated in the OTC market (�OTC total return swap�) or may be executed on a registered exchange (�centrally cleared totalreturn swap�).

A bi-lateral OTC swap is an agreement between the Fund and a counterparty where the parties agree to exchange future cashflows for the life of the swap. Bi-lateral OTC swaps are marked-to-market daily and changes in value are reflected in theStatements of Financial Position in the unrealized gain or loss on derivatives. Pursuant to the terms of the contract, the Fundmay be required to pledge securities or cash as collateral. Securities pledged as collateral, if applicable are identified in theSchedule of Investments and are included in investments at fair value through profit and loss in the Statements of FinancialPosition. Cash pledged as collateral is included in the margin and collateral receivable / payable account in the Statements ofFinancial Position.

A centrally cleared OTC swap is an agreement between the Fund and a counterparty, and cleared by a futures commissionmerchant (�FCM�) through a clearinghouse. Once cleared, the clearinghouse serves as a central counterparty, and facilitatesall periodic payments paid or received over the life of the transaction.

Centrally cleared OTC swaps are marked-to-market daily and any subsequent payments (variation margin) required tomaintain certain collateral levels are made or received depending on the daily fluctuations in the value of the swaps and areincluded in the margin and collateral receivable / payable account in the Statements of Financial Position. Any gains (losses)resulting from revaluation are recorded as net change in unrealized appreciation (depreciation) in value of investments andderivatives of the Statements of Comprehensive Income.

For OTC derivatives traded under an International Swaps and Derivatives Agreement (�ISDA�) master agreement, posting ofcollateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with theapplicable counterparty exceeds a minimum transfer amount and can vary depending on the counterparty and the type ofagreement. Generally, collateral is determined at the close of business each day and any additional collateral required due tochanges in derivative values may be delivered by the Fund or the counterparty within a few business days. Collateral pledgedmay be in the form of cash and/or securities. Cash pledged as collateral by the Fund for OTC derivatives is presented in theStatements of Financial Position as margin and collateral receivable / payable and securities pledged as collateral are identifiedin the respective Fund’s Schedule of Investments. Should a Fund fail to meet any of these provisions, the derivativecounterparty has the right to terminate the derivative contract and require immediate payment by the Fund for those OTCderivatives with that particular counterparty that are in a net liability position.

(f) Offsetting of derivative financial instruments — Derivative counterparty credit risk is managed through formal evaluation of thecreditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty risk on OTC derivatives,whenever possible, by entering into International Swaps and Derivatives Association (�ISDA�) master agreements with certaincounterparties. These agreements contain various provisions, including but not limited to enforceable master netting arrangements,collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certaindeteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund tomaintain certain net asset levels and/or, limit the decline in net assets over various periods of time. In the event of default or earlytermination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded to onenet amount, payable by one counterparty to the other, however, absent an event of default or early termination, OTC derivativesassets and liabilities are settled on a gross basis, presented gross, and not offset in the Statements of Financial Position. Earlytermination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty underISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchangeclearing house for exchange traded and centrally cleared derivatives.

See Note 12(a) for details of derivative assets and liabilities presented gross, amounts available for offset and collateral amountspledged or held in trust for the Fund.

(g) Transaction costs — Transaction costs, such as brokerage commissions, incurred on the purchase and sale of a security are chargedas an expense for the period and shown on the Statements of Comprehensive Income.





Investments in Underlying Funds, managed by the Manager or an affiliate of the Manager (�Underlying Funds�), do not incurtransaction costs on those transactions.

(h) Security transactions, investment income, expenses and distributions — Security transactions are recorded on the trade date.Estimated expenses are accrued daily. Dividend income, distributions received from or made to Underlying Funds are recorded onthe ex-dividend date.

Interest for distribution purposes shown on the Statements of Comprehensive Income represents the coupon interest received bythe Fund accounted for on an accrual basis. The Fund does not amortize premiums paid or discounts received on the purchase offixed income securities except for zero coupon bonds which are amortized on a straight line basis.

Realized and unrealized gains or losses on security transactions are determined on an average cost basis. Average cost does notinclude amortization of premiums or discounts on fixed income securities with the exception of zero coupon bonds.

(i) Income Taxes — The Fund qualifies as a mutual fund trust within the meaning of the Income Tax Act (Canada) (the “Act”).Accordingly the Fund is entitled to a capital gains refund and, as a result, income taxes payable on net realized capital gains arerefundable on a formula basis when units of the Fund are redeemed. In addition, the Fund is not subject to alternative minimum taxor taxes on prescribed investments and certain designated income as defined under Part X.2 and XII.2, respectively of the Act.

Each year, the Fund distributes sufficient net taxable income and net realized capital gains for the taxation year so that the Fund doesnot pay tax under Part 1 of the Act. As a result, the Fund does not record income taxes. Since the Fund does not record income taxes,the tax benefit of capital and non-capital losses has not been reflected in the Statements of Financial Position as a deferred incometax asset.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreigncurrency transactions in the foreign jurisdiction in which it invests. Foreign taxes, if any, are recorded based on the tax regulationsand rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund recordsan estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

(j) Functional and presentation currency — The Fund’s functional currency is the Canadian Dollar (“CAD”) which is the currency of theprimary economic environment in which it operates. The Fund is distributed within Canada with the subscriptions and redemptionsprimarily denominated in CAD. Accordingly, the Manager has determined that the functional currency of the Fund is CAD. TheFund’s presentation currency is also CAD.

(k) Foreign currency translation — Portfolio securities and other assets and liabilities denominated in foreign currencies are translatedinto the functional currency based on the mid exchange rate on the valuation date. Purchases and sales of securities and incomeitems denominated in foreign currencies are translated into the functional currency at the exchange rate in effect on the transactiondate. When an exchange rate is unavailable or unreliable, it will be determined using procedures established and accepted by theBoard of Directors and the Manager.

Realized foreign exchange gains or losses arise from sales of foreign currencies, changes between the trade date and settlementdate values on security and capital transactions, and the difference between the recorded amounts of foreign currency denominateddividends, interest, withholding taxes, and U.S. short-term holdings, and the functional currency equivalent of the amounts actuallyreceived or paid. These gains or losses are reported on the Statements of Comprehensive Income as net realized and/or unrealizedforeign exchange gain (loss).

(l) Unconsolidated structured entities — The Fund may invest in Underlying Funds determined to be unconsolidated structuredentities, as decision making in the Underlying Fund is not governed by the voting right or other similar right held by the Fund. Theinvestments in Underlying Funds are subject to the terms and conditions of the respective Underlying Fund’s offering documen-tation and are susceptible to market price risk arising from uncertainties about future values of those Underlying Funds. TheUnderlying Funds’ objectives are generally to achieve long-term capital appreciation and/or current income by investing in a portfolioof securities and other funds in line with each of its documented investment strategies. The Underlying Funds apply variousinvestment strategies to accomplish their respective investment objectives.

The Underlying Funds finance their operations by issuing redeemable units which are puttable at the holder’s option, and entitle theholder to a proportional stake in the Fund’s net assets.





The Fund may invest in exchange-traded funds (�ETF�), which are also considered to be unconsolidated structured entities, asdecision making in the ETF is not governed by the voting right or other similar right held by the Fund.

The Fund does not consolidate its investments in Underlying Funds and ETFs but accounts for these investments at fair value, asthe Manager has determined that the Funds are investment entities in accordance with IFRS 10 �Consolidated FinancialStatements�, since the Fund meets the following criteria:

(i) The Fund obtains funds from one or more investors for the purpose of providing those investors with investment managementservices.

(ii) The Fund commits to its investors that its business purpose is to invest funds solely for the returns from capital appreciation,investment income or both and

(iii) The Fund measures and evaluates the performance of substantially all of its investments on a fair value basis.

Therefore the fair value of the investments in the Underlying Funds and ETFs are included in the Schedule of Investments andincluded in non-derivative investments at fair value through profit or loss in the Fund’s Statements of Financial Position. The changein fair value of the investment held in the Underlying Fund is included in the net change in unrealized appreciation (depreciation)in value of investments in the Statements of Comprehensive Income.

(m) Increase (decrease) in net assets from operations per unit — This calculation is based on the increase (decrease) in net assets fromoperations attributable to each series divided by the weighted average number of units of that series outstanding during the period.

(n) Accounting judgements, estimates and assumptions — The preparation of financial statements in accordance with IFRS may requirethe Manager to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the dateof the financial statements and the amounts of income and expense reported during the periods. Actual results may differ from thoseestimates.

The key areas where judgements are applied is in the determination of the functional currency of the Fund, as discussed in Note 3(j),the determination of whether the Fund meets the definition of an investment entity and whether the Fund’s investments are madein structured entities as discussed in Note 3(l). Assumptions and estimates are made in the determination of fair values of financialinstruments not traded on an active market as discussed in Note 3(d).

4. Capital Risk Management

The capital of the Fund is comprised of its net assets attributable to redeemable units. The Fund’s capital is managed in accordance withits investment objectives and policies, and there are no externally imposed restrictions in relation to the Fund’s units. Changes in capitalduring the period are reflected in the Statements of Changes in Net Assets Attributable to Holders of Redeemable Units. The Fund hasno specific restrictions or capital requirements on the subscriptions and redemption of units, other than minimum subscriptionrequirements. The Fund endeavors to manage capital by maintaining a strong capital base to support the investment activities of the Fundwhile maintaining sufficient liquidity to meet redemptions. Unitholders are entitled to distributions, which are then reinvested in additionalunits of the Fund or, at the option of the unitholder, paid in cash. Units of the Fund are redeemable at the option of the unitholders inaccordance with the provisions in the Trust Indenture.

Changes in issued units are summarized as follows:

Series A Series F

June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017

Outstanding units — beginning 104,239 — 15,824 —Subscriptions 13,894 104,020 13,262 15,676Reinvestments — 699 — 148Redemptions (7,785) (480) (1,153) —

Outstanding units — ending 110,348 104,239 27,933 15,824




4. Capital Risk Management (Continued)

Series O Series PF

June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017

Outstanding units — beginning 212,010 — 304,875 —Subscriptions 217,816 219,009 13,112 315,934Reinvestments — 2,172 — 673Redemptions (2,311) (9,171) (6,021) (11,732)

Outstanding units — ending 427,515 212,010 311,966 304,875

5. Related Party Transactions

The Manager is the trustee, principal distributor, registrar, portfolio advisor and transfer agent of the Fund. The Manager and/or itsaffiliates provides or arranges for the provision of all management and administrative services for day-to-day Fund operations, includingmarketing, promotion and distribution of the Fund, portfolio advisory services and the provision of key management personnel to theFund. The Manager has engaged affiliates of the Manager as portfolio advisors or sub-advisors (the �Portfolio Advisor� or �Sub-Advisor�)to provide investment analysis and recommendations to the Manager and execute or arrange for brokers to execute portfolio transactionsin respect of the Fund.

(a) Management and investment advisory fees (�management fees�)

The Fund pays an aggregate monthly fee for management and investment advisor services (�management fees�) to the Manager. Aportion of the management fees, paid to the Manager, may be payable to a Sub-Advisor in respect of sub-advisory services, whereapplicable. Management fees payable at the period ends are shown in the Statement of Financial Position of the Fund. The monthly feeis calculated as 1/12 of the annual rate applied against the monthly average net assets of each series, plus applicable taxes. The annualrates are set out below.

Series A: 1.90%

Series F: 0.90%

Series PF: 0.70%

Series O management fees for the Fund is negotiated with and paid by the individual unitholder directly to the Manager.

To avoid duplication of fees charged to the Fund for its investments in Underlying Funds, managed by the Manager, the fees of thoseFunds (that would otherwise be payable) will be reduced to reflect the management fees paid indirectly through investments by the Fundsin such Underlying Funds.

(b) Fixed administration fees

The Manager pays the operating expenses of the Fund, other than certain Fund costs (�Fund Costs�), such as borrowing and interestcosts, investor meeting costs (as permitted by Canadian securities regulation), the fees and expenses of the Independent ReviewCommittee, directors’ fees and expenses, any costs and expenses associated with litigation for the benefit of the Fund or brought topursue rights on behalf of the Fund and the cost of compliance with any new government and regulatory requirements, in exchange fora payment by the Fund to the Manager of an annual fixed rate administration fee, except for Series O. The operating expenses payableby the Manager include, but are not limited to, transfer agent fees, custodian fees, legal fees and audit fees. As such, the Fund did notdirectly pay these costs; hence line items for these amounts are not shown on the Statement of Comprehensive Income.

The Manager may, in some years and in certain cases, waive a portion of a series’ Administration Fee or absorb certain Fund Costs. Thedecision to waive the Administration Fee or absorb certain Fund Costs, or a portion thereof, is determined at the discretion of the Manager.In addition, the Manager pays all operating expenses of Series O.

The monthly fixed administration fee is calculated as 1/12 of the annual rate applied against the monthly average daily net assets of eachseries, plus applicable taxes, except for Series O. The annual rates for series A and F is 0.20% and the annual rate for series PF is 0.15%.Series O is not charged an administration fee. The fixed administration fees payable at the period ends are shown in the Statement ofFinancial Position.




5. Related Party Transactions (Continued)

(c) Manager holdings

The Manager held the following units in the Fund as at June 30, 2018 and December 31, 2017.

June 30, 2018 December 31, 2017Series A 49,000 49,000Series F 500 500Series O 500 500Series PF 250,000 250,000

The Manager’s holdings represents 34.2% of the net assets of Fund as at June 30, 2018 and 48.7% as at December 31, 2017.

(d) Affiliated Service Providers

Franklin Templeton Investment Management Limited, an affiliate of the Manager, is the Sub-Advisor to the Fund.

Franklin Templeton Services, LLC (“FTS”) provides fund accounting and portfolio valuation services in connection with the Fund andprovides certain back office and administration services to the Manager. FTS is an affiliate of the Manager and may receive compensationfrom the Manager as remuneration for its services.

(e) Other services

In addition to providing management and portfolio advisory services, the Manager acts as trustee, registrar and transfer agent for theFund. These services are provided by the Manager in the normal course of operations and are part of the services provided by theManager in exchange for the Administration Fee paid by the Fund to the Manager as discussed in Note 5(b).

6. Sales Charges

The sales charge incurred by the unitholders of Series A is dependent on the purchase option selected at the time of purchase.

Under the front-load sales option, a negotiable fee of up to 6% of the purchase price is payable by the Series A investors to their dealers.Up to 10% of an investor’s investment in Series A may be redeemed in each calendar year without a redemption charge. Under thedeferred sales charge option, the Series A investors will pay a redemption fee to the Manager if they redeem their units within six yearsof purchasing them. This redemption fee is based on a declining percentage, ranging from 6% to 0%, of the original cost of the investor’sunits and how long the investor has held them.

No sales charges are paid in respect of the sale of Series F, PF and O of the Fund.

7. Interests in Other Entities

As discussed in Note 3(l), Underlying Funds and ETFs are unconsolidated structured entities and are measured at fair value throughprofit and loss.

The tables below show the Fund’s interest in unconsolidated structured entities in dollar and percentage terms as at June 30, 2018 andDecember 31, 2017.

As at June 30, 2018 As at December 31, 2017

Fair Value ofUnderlyingFund / ETF

Investmentsin UnderlyingFund / ETF atFair Value(a)

% Held ofUnderlyingFund / ETF




(000s) (000s) % (000s) (000s) %Franklin Bissett Canadian Government Bond Fund.. . . . . $ 911,900 $754 0.08% $ 758,597 $493 0.07%Franklin Bissett Corporate Bond Fund.. . . . . . . . . . . . . . . . . . . 193,776 496 0.26% 198,917 393 0.20%Franklin Bissett Money Market Fund .. . . . . . . . . . . . . . . . . . . . 226,726 274 0.12% 203,282 272 0.13%Templeton Emerging Markets Smaller Companies

Fund.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,393,822 199 0.01% 1,522,981 159 0.01%

Templeton Global Bond Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,969,068 346 0.02% 1,910,140 161 0.01%




7. Interests in Other Entities (Continued)

As at June 30, 2018 As at December 31, 2017







(000s) (000s) % (000s) (000s) %iShares Emerging Markets Local Currency Bond ETF .. . — — — 398,449 110 0.03%iShares JP Morgan USD Emerging Markets Bond ETF .. — — — 15,235,892 108 —*iShares MSCI ACWI ETF .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,184,793 257 —* 11,040,162 181 —*iShares MSCI Japan ETF.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 24,002,289 91 —*S&P Depositary Receipt Bloomberg Barclays High Yield

Bond ETF .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,482,442 251 —* 15,674,239 196 —*

S&P Depositary Receipt Gold Trust ETF .. . . . . . . . . . . . . . . . . 43,375,973 390 —* 43,686,023 191 —*

* Amount rounded to zero in nearest percentage point.

(a) Represents fair value of financial assets included in investments at fair value through profit and loss in the Statements of Financial Position.

8. Broker Commissions

Commissions paid to brokers for portfolio transactions during the periods ended June 30, 2018 and 2017 are shown below.

A portion of commissions paid may include payment for goods and services that are used to assist with investment or trading decisionssuch as investment research, analysis and reports (“research services”). Where ascertainable, the value of the research services includedin the commissions paid is listed in the table below.

June 30, 2018 June 30, 2017

Commissions Research Costs Commissions Research Costs

(000s) (000s) (000s) (000s)$3 $— $2 $—

9. Taxes

The Manager determines at each tax year end the amounts of net income and realized capital gains of the Fund to be distributed to eachunitholder.

Unitholders may receive distributions in cash on written request to the Fund, otherwise distributions of the Fund are automaticallyreinvested in additional units of the Fund at the trading net asset value on the date of distribution.

As at December 31, 2017, the Fund had no unused capital losses for income tax purposes. Capital losses, if any, may be carried forwardindefinitely and applied to reduce future taxable capital gains. Non-capital losses may be carried forward to reduce future taxable income.There were no non-capital losses available to the Fund as at December 31, 2017.

10. Financial Risk Management

Risks arising from holding financial instruments are inherent in the Fund’s activities and are managed through a process of ongoingmeasurement and monitoring. These financial risks may include, among others, market risk (including currency risk, interest rate riskand other price risk), liquidity risk, credit risk and concentration risk. All investments result in a risk of loss of capital. These risks aremoderated through careful selection of securities and other financial instruments within the Fund’s investment guidelines by therespective portfolio advisors. The risks are measured using a method that reflects the expected impact on the results and net assetsattributable to unitholders of the Fund from reasonably possible changes in the relevant risk variables.

(a) Currency risk

The Fund may hold assets and liabilities denominated in currencies other than the functional currency, as do the Underlying Funds, andmay therefore be exposed to currency risk as the values of such assets and liabilities will fluctuate due to changes in exchange rates.




10. Financial Risk Management (Continued)

The Manager monitors the Fund’s currency risk position, and may enter into forward exchange contracts to manage foreign exchangeexposure.

The tables below summarize the Fund’s exposure to currency risk, where applicable. Amounts shown are based on the carrying value ofmonetary and non-monetary assets, less liabilities. When individual currencies held are less than 5% of net assets, that currency hasbeen included in “Other”. The table also illustrates, the expected decrease or increase in net assets had the functional currencystrengthened or weakened by 5% in relation to all foreign currencies, with all other variables held constant. Actual results may differ fromthis sensitivity analysis and the difference could be material.

June 30, 2018 December 31, 2017

Currency AmountAs % of

net assets AmountAs % of

net assets

(000s) (000s)USD ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 627 7.26% $1,105 17.21%Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,157 13.38% 318 4.94%

$1,784 20.64% $1,423 22.15%

Impact on net assets from 5% currency movement . . . . . . . . . . . . . . . . . . . . . . . $ 89 1.03% $ 71 1.11%

(b) Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of interest bearingfinancial instruments. The Manager monitors overall interest rate sensitivity on a periodic basis.

The table below summarizes all interest bearing financial instruments (excluding overnight term deposits) held by the Fund which issubject to interest rate risk, categorized by the maturity dates of the instrument. The table illustrates the increase or decrease expectedin net assets for the Fund had the interest rates lowered or risen by 25 basis points, assuming all other variables remain constant. Actualresults may differ from this sensitivity analysis and the difference could be material.

LessThan

1 year1-3

years3-5

years>5

years Total

InterestRate

Sensitivity

(000s) (000s) (000s) (000s) (000s) (000s)June 30, 2018 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $69 $— $193 $— $262 $ 1December 31, 2017 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —

(c) Other price risk

Other price risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate as a result of changes in marketprices (other than those arising from currency risk or interest rate risk). Those changes may be caused by factors specific to the individualfinancial instrument or its issuer, or factors affecting a market or market segment. Other assets and liabilities are monetary items that areshort-term in nature, and as such they are not subject to other price risk.

The table below illustrates the expected increase or decrease in net assets if the value of the Fund’s investments had increased ordecreased by 5%, with all other variables held constant. Actual results may differ from this sensitivity analysis and the difference couldbe material.

June 30, 2018 December 31, 2017

Sensitivity on NetAssets

% Impact on NetAssets

Sensitivity on NetAssets

% Impact on NetAssets

(000s) (000s)$302 3.49% $265 4.13%

(d) Liquidity risk

Liquidity risk is the risk that the Fund will not be able to meet its liabilities as they fall due, as the Fund is exposed to daily cash redemptionof units. The Underlying Fund, in which the Fund invests, is invested mainly in securities which are traded in active markets and canreadily be disposed of. In addition, sufficient cash and cash equivalents are maintained to meet normal operating requirements.





The Fund’s financial liabilities may include redemptions payable, distributions payable, accrued liabilities and derivative liabilities are duewithin 3 months. Redeemable units are redeemable on demand at the holder’s option. However, the Manager does not expect that thecontractual maturity will be representative of the actual cash outflows, as holders of these instruments typically retain them for a longerperiod.

In accordance with the Fund’s investment objective, the Manager monitors the Fund’s liquidity position on an ongoing basis.

(e) Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered intowith the Fund. The fair value of a financial instrument takes into account the credit rating of its issuer, and accordingly, represents themaximum risk the Fund is exposed to. Credit risk is generally lower if the issuer has a high credit rating from an independent credit ratingagency, while the risk is generally higher if the issuer has a low credit rating or no credit rating. Where applicable, credit ratings have beendisclosed at the end of the Schedule of Investment Portfolio.

All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associatedreceivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made ona purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. However, thereare risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assetsdeposited with the custodian or broker may be exposed to credit risk with regard to such parties. In addition, there may be practicalproblems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party.

All cash and trading transactions are carried out by banks rated A or higher by Standard & Poor’s as at June 30, 2018 and December 31,2017.

(f) Concentration risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location,product type, industry sector or counterparty type. Below is a summary of the Fund’s concentration risk.

Region Mix

June 30,2018(%)

December 31,2017(%)

North America 51.32 56.89Europe 9.85 12.35Asia 9.65 11.48Australia & New Zealand 0.53 0.95Middle East & Africa 0.44 0.63Latin America & Caribbean 0.35 0.08

Asset Class Weightings

June 30,2018(%)

December 31,2017(%)

Common Stocks 35.06 45.33Underlying Funds 23.93 23.02Exchange-Traded Funds 10.39 13.66Bonds 2.23 —Preferred Stocks 0.53 0.37Short-term securities and all other

assets, net27.86 17.62

(g) Fair value estimation

The Fund classifies fair value measurements of investments held using a fair value hierarchy that reflects the significance of the inputsused in making the measurements. The fair value hierarchy has the following levels:

• Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (prices)or indirectly (derived from prices)

• Level 3—inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The determination of what constitutes “observable” requires significant judgement by the Manager. The Manager considers observabledata to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided byindependent sources that are actively involved in the relevant market. Financial instruments that trade in markets that are not considered





to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observableinputs are classified within Level 2. Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently.These may include private equity and corporate debt securities. As observable prices are not available for these securities, the Managerhas used valuation techniques to derive the fair value.

The Fund’s investments are generally classified as follows:

• Equities — The Fund’s equity positions are classified as Level 1 when the security is actively traded and a reliable price is observable.Certain of the Fund’s equities may not trade frequently or have a fair value factor included and therefore observable prices may notbe available. In such cases, fair value is determined using observable market data (e.g., transactions for similar securities of the sameissuer) and the fair value is classified as Level 2, unless the determination of fair value requires significant unobservable data, in whichcase the measurement is classified as Level 3.

• Bonds and short-term investments — Debt securities generally trade in the OTC market rather than on a securities exchange. Theinputs that are significant to valuation are generally observable such as benchmark yield curves, credit spreads, estimated defaultrates, anticipated market interest rate volatility, coupon rates, anticipated timing of repayments, underlying collateral and other uniquesecurity features in order to estimate the relevant cash flows. Therefore bonds and short-term investments have been classified asLevel 2, unless the determination of fair value requires significant unobservable data, in which case the measurement is classified asLevel 3.

• Investments in mutual funds/unit trusts and exchange traded funds — The Fund’s positions in the mutual funds / unit trusts andexchange traded funds are typically in positions that are actively traded and a reliable price is observable and as such is classified asLevel 1. Where the determination of fair value requires significant unobservable data the measurement is classified as Level 3.

• Purchased and written options — The Fund’s positions in purchased and written options are valued at their close price as reportedby the principal exchange or over-the-counter market on which the contract is traded. Therefore, the purchased and written optionsthat are exchange-traded have been classified as Level 1. Purchased and written options that are traded in the OTC market have beenclassified as Level 2, unless the determination of fair value requires significant unobservable data, in which case the measurement isclassified as Level 3.

• Other derivative assets and liabilities — Derivative assets and liabilities consist of forward foreign exchange contracts, interest rateswaps, credit default swaps and futures contracts which are valued based primarily on the contract notional amount, the differencebetween the contract rate and the forward market rate for the same currency, interest rates and credit spreads. Contracts for whichcounterparty credit spreads are observable and reliable, or for which the credit-related inputs are determined not to be significant tofair value, are classified as Level 2.

The carrying values of cash, capital units sold receivable, dividends and interest receivable, payable for investments sold or purchased,capital units redeemed payable, distributions payable, accrued liabilities and the Fund’s obligation for net assets attributable to holdersof redeemable units approximate their fair values due to their short-term nature.

The following tables show the classification of the Fund’s financial assets and liabilities measured at fair value as at June 30, 2018 andDecember 31, 2017.





June 30, 2018 December 31, 2017

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)

Equities — Long $ 3,075 $ — $ — $ 3,075 $ 2,935 $ — $ — $ 2,935Bonds — 193 — 193 — — — —Mutual Funds/Unit

Trusts/ETFs 2,966 — — 2,966 2,355 — — 2,355Short-term securities — 2,269 — 2,269 — 950 — 950

Total Investments $ 6,041 $ 2,462 $ — $ 8,503 $ 5,290 $ 950 $ — $ 6,240

Purchased options $ 26 $ — $ — $ 26 $ 8 $ — $ — $ 8Written options — — — — (2) — — (2)Derivative assets $ 6 $ 16 $ — $ 22 $ — $ 57 $ — $ 57Derivative liabilities (10) (93) — (103) — (18) — (18)

If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instrumentsare reclassified into Level 2, unless the measurement of the instruments fair value requires the use of significant unobservable inputs, inwhich case it is classified as Level 3. The Fund’s policy is to recognise transfers into and out of the fair value hierarchy levels as of the dateof the event or change in circumstances giving rise to the transfer.

In accordance with the Fund’s valuation policy, the Fund may apply fair value adjustment factors when quoted market prices are deemedto have been affected by significant market events which exceed pre-determined thresholds.

As at June 30, 2018 and December 31, 2017, there were no significant market events to cause the pre-determined tolerances to bebreached; hence there were no transfers between Level 1 and Level 2.

11. Trading Net Asset Value

As discussed in Note 3(a), the Trading NAV per unit may differ from the IFRS NAV per unit as shown in the Statements of FinancialPosition. As at June 30, 2018 and December 31, 2017 the Fund’s Trading NAV per unit did not differ from the IFRS NAV per unit.

12. Other Information

(a) Offsetting of derivative financial instruments

As discussed in Note 3(e), the Fund may be subject to enforceable master netting arrangements, in the form of ISDA agreements, withcertain counterparties.

Absent an agreement, or an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offsetin the Statements of Financial Position.

The following tables present the financial instruments, subject to enforceable master netting arrangements, but are not offset as atJune 30, 2018 and December 31, 2017. The ’Net Amount’ represents the impact to the Fund if all set-off rights were exercised.

June 30, 2018Amounts available for offset

CounterpartyGrossAssets

FinancialInstruments

CollateralHeld inTrust (a)

NetAmount

GrossLiabilities


CollateralPledged (a)

NetAmount

(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)Bank of America, N.A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 $— $— $ 9 $ — $— $— $ —JP Morgan Chase Bank, N.A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7 — — (92) (7) — (85)Societe Generale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — (1) — — (1)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16 $ 7 $— $ 9 $(93) $(7) $— $(86)




12. Other Information (Continued)

December 31, 2017Amounts available for offset

CounterpartyGrossAssets


CollateralHeld inTrust (a)

NetAmount

GrossLiabilities


CollateralPledged (a)

NetAmount

(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)Bank of America, N.A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1 $— $— $ 1 $ — $ — $— $—JP Morgan Chase Bank, N.A .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 18 — 38 (18) (18) — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57 $18 $— $39 $(18) $(18) $— $—

(a) In some instances, the collateral amount disclosed in the tables above was adjusted due to the requirement to limit the collateral amounts to avoid the effect ofover collateralization. Actual collateral held in trust and/or pledged may be more than the amounts disclosed therein. Collateral held in trust represents amountsheld by a counterparty or custodian on behalf of the Fund and accordingly is not presented in the Statements of Financial Position. Cash pledged as collateralrepresents amounts held by the Fund’s custodian/counterparty on behalf of the counterparty and can be in the form of cash and or securities. Cash pledged ascollateral is included in margin and collateral in the Statements of Financial Position, while securities pledged as collateral is identified on the respective Fund’sSchedule of Investments.

(b) Financial instruments classification

As discussed in Note 3(a), upon transition to IFRS 9, the Fund’s derivatives were classified as fair value through profit and loss (�FVTPL�).This classification differs from the classification under IAS 39 and as a result, there are changes in the disclosure of categorization ofderivatives. Under IAS 39, derivatives were categorized as held for trading, however such sub-categorization is not applicable under IFRS9. There is no impact to the measurement of derivatives held in the Fund as a result of the change in the categorization of suchinstruments.

13. Financial Statement Presentation

The amounts shown on the Statements of Financial Position, the Statements of Comprehensive Income, Changes in Net AssetsAttributable to Holders of Redeemable Units and Cash Flows are rounded to the nearest thousand. As a result, balances reported mayinclude amounts rounded to zero and as a result, certain line items on the respective statements may not be shown. Per unit amountsand number of units outstanding shown are actual amounts.

14. Currency Legend

Below is a list of currency abbreviations that may be used throughout the financial statements.

ARS Argentina PesoAUD Australian DollarBRL Brazilian RealCAD Canadian DollarCHF Switzerland FrancCNY China Yuan RenminbiCOP Colombian PesoDKK Denmark KroneEUR EuroGBP United Kingdom PoundHKD Hong Kong DollarIDR Indonesian RupiahILS Israel Shekel

INR Indian RupeeJPY Japanese YenKRW South-Korean WonMXN Mexican PesoNOK Norwegian KronerNZD New Zealand DollarSEK Swedish KronaSGD Singapore DollarTWD Taiwan New DollarUSD United States DollarZAR South African Rand




Semi-Annual Report

Franklin Templeton Investments Canada200 King Street West, Suite 1500

Toronto, ON, M5H 3T4

www.franklintempleton.ca

Client Services Toll-free:(800) 387-0830 Fax: (866) 850-8241

Franklin Templeton Investments Canada is a business name used by Franklin Templeton Investments Corp.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Pleaseread the Franklin Templeton Investments Funds’ prospectus before investing. Mutual fund securities are not covered by the CanadaDeposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the money marketfunds will be able to maintain their net asset value per security at a constant amount or that the full amount of your investment inthe fund(s) will be returned to you. Mutual funds are not guaranteed, unit/share values change frequently and past performancemay not be repeated. Fiduciary Trust Company of Canada is a wholly owned subsidiary of Franklin Templeton Investments Corp.Franklin Bissett Investment Management is a part of Franklin Templeton Investments Corp.

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semi-annualreport june 30, 2018 - franklin templeton

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